Andrew Stunell: I think that conventionally, one thanks a Minister for their answer, but may I say that that is actually a very disappointing answer, especially for my constituents? They are getting increasingly puzzled and angry at having a local tax system based on a 15-year-old valuation of their homes, which has no contact with current realities, equity or their ability to pay. Will the Minister and the Secretary of State not accept the urgent need for a new, fairer system based on the ability to pay, which will allow local councils to deliver good services at a fair cost?

David Drew: In advance of any major revaluation, will my right hon. Friend consider the idea of encouraging local authorities that want to offer council tax discounts for householders and businesses that have introduced energy efficiency measures and microgeneration? In one fell swoop, that would deal more quickly with the problems of climate change than anything else that could be done.

Rosie Winterton: My right hon. Friend the Secretary of State is consulting on powers for local authorities, particularly with regard to low-carbon strategies. A number of local authorities are also innovatively considering, during these difficult economic times, how they can link energy efficiency measures with stimulating the local economy and employing local people. That is exactly the sort of interventionist approach that we think is correct.

Paul Rowen: It is now five months since the Government's extended consultation on the local authority business growth incentive scheme closed, and we are four months into the financial year. Given that that the money involved is meant to incentivise regeneration, and that we are in a recession, when are the Government going to release that money to local authorities?

Sarah Teather: While I welcome the Government's conversion on the issue of the housing revenue account and their commitment to dismantling the system, it concerns me that there appears to be no mechanism to enable that to be done. Why have the Government not been willing to include a Bill in the draft legislative programme to get rid of the HRA system and extend that arrangement beyond just new houses, as the Minister suggested would happen in his earlier answer?

Mr. Speaker: The hon. Gentleman is a very experienced hand and knows very well—he referred to it at the start of his point of order—that the House has made a decision on the question of whether the Youth Parliament should be able to hold a debate here. The hon. Gentleman was present at and a contributor to the debate on that matter in March of this year. I know that he would not seek for one moment to inveigle me into repeating a debate that we held some months ago. As a point of clarification, it might be of interest to the House to know what I understand to be the case; namely that the annual meeting of the UK Youth Parliament is indeed taking place later this month—I believe in the county of Kent—but that that is a quite separate matter from the special occasion of the debate in this House upon which the House agreed earlier this year.

David Heath: I beg to move,
	That leave be given to bring in a Bill to make provision for establishing a commission of inquiry subsequent to a resolution of Parliament into matters relating to the conduct of a Minister of the Crown; to make further provision for establishing a commission of inquiry into particular events which have or may have occurred and which have caused, or are capable of causing, public concern; to set out the procedures for setting up such a commission of inquiry, its powers, rights and privileges; to amend the Inquiries Act 2005; and for connected purposes.
	The Bill is partly a response to the setting up of the Iraq inquiry and the excellent debate in the Chamber the week before last. It is partly an attempt to look ahead and to prepare the House for any future eventuality that we may have to face. But principally it is a Bill to enable Parliament, in at least one respect, to assert its authority, to remove its assumed metaphorical cringe to the Executive and to stand on its own two feet. That is a worthwhile objective in itself.
	Mr. Speaker, you will recall the problems that were identified in the debate on the Iraq war inquiry: the very long delay in setting up the inquiry at all, subsequent to the decision of the Prime Minister; the lack of openness that was originally suggested in terms of the way in which the inquiry was to be conducted; and the deficiencies of process, with many hon. Members being worried about the inability to take evidence under oath and the inability of the inquiry to have the power to summon witnesses. There were concerns about the composition of the commission of inquiry—not those who were asked to join, but those who were omitted and the particular areas of expertise that they might have brought—as well as about the terms of reference and about the timetable for report.
	Some of those were subsequently dealt with as a result of the debate that we had in the House. The concerns were addressed by a process of retreat on the part of the Prime Minister, communicated by correspondence to the chairman of the inquiry. I am not sure that that was an entirely sensible way of dealing with the matter; nevertheless, it may have produced at least some potential remedies. But the issue is this: when we need an inquiry because of a matter of great public concern, it should be this House that takes the decision, not a member of the Executive and not a Minister. This has been known for a very long time. Lord North is not often quoted as a model for parliamentarians or for Prime Ministers but in 1774 he referred to this House as
	"the grand inquest of the nation...our very clear duty as members of this House is to undertake the very difficult, the very painful, the very meritorious task of watching our Ministers, of reprehending them, of blaming and calling them daily to account."
	That is a succinct expression of our duty, and, in extremis, part of the way in which we fulfil it is by setting up a public inquiry, or at least it was; there is a long history of this House having set up commissions of inquiry in earlier years. That was formalised under the Tribunals of Inquiry (Evidence) Act 1921. I do not defend every aspect of that Act; it had problems in procedural terms and parts of it were certainly capable of amelioration, but it nevertheless provided a clear power for the House to set up a commission of inquiry.
	That then began to be questioned by the Government when they were looking forward to introducing legislation in this area. The Select Committee on Public Administration, to which I owe a great debt of gratitude in preparing my Bill, looked at this in its first report of 2004-05. It stated that
	"in future inquiries into the conduct and actions of government should exercise their authority through the legitimacy of Parliament in the form of a Parliamentary Commission of Inquiry composed of parliamentarians and others, rather than by the exercise of the prerogative power of the Executive."
	Needless to say, the Government did not agree with that view; it will not surprise many Members to learn that they did not feel that it was right for Parliament as a body to be held to be superior to the prerogative powers of the Executive. Therefore, in the dying days of the last Parliament, they brought forward the Inquiries Act 2005, the effect of which was to repeal the 1921 Act and to remove entirely the formal role of Parliament in setting up public inquiries. I think that that was fundamentally wrong-headed, because there are 1,001 reasons why Ministers may not wish there to be a public inquiry into aspects of their conduct or the conduct of others in their control. There are so many reasons for them to delay, obfuscate or misdirect, rather than to have the searching after truth that a properly constituted public inquiry can provide.
	We should also remember that public inquiries often look into the actions of public bodies, of which Ministers are hardly disinterested observers; they have a responsibility there, so of course it is often not in their interests to set up a formal inquiry. I believe that were such inquiries to be set up under the authority of Parliament, they would have more legitimacy and the public would have more confidence. The PAC returned to this matter in its ninth report of 2007-08, and recommended the provision of a mechanism for setting up such an inquiry.
	That is the format on which my Bill rests. By amending the 2005 Act, it would restore powers in the 1921 Act to Parliament, although not in precisely the same form. It equips an inquiry to do its job effectively, enabling Parliament to confer the powers that an inquiry would need to take evidence under oath, to compel witnesses, to ensure that it has the papers before it, to ensure that its composition is appropriate to the task, and to ensure that wherever possible it takes its evidence in public so that the general public have the confidence that their interests are being properly represented. The parliamentary mechanism for the setting up of an inquiry requires a majority of this House, so it is not open to mischief—people will not be able to set up inquiries on spurious grounds, for instance—because a majority of this House is required, and a majority of this House will normally support the Government of the day unless there is a high level of public anxiety.
	I believe that this House has a specific job to do on behalf of the nation. That job is to speak for, and ask questions on behalf of, the public. Sometimes we can do that within this Chamber. Sometimes we can do it in our Select Committees and they are the appropriate way of looking into matters in more depth, but at other times those Committees can find obstacles put in their way, as the Select Committee on Foreign Affairs found when it carried out its own inquiry into the lead-up to the Iraq war. When that is the case, it is sometimes necessary, in order to restore faith in democratic principles within this House and to allow the public to have sight of the truth, to set up a properly constituted commission of inquiry. When we do that, it should be in the hands of this House and this Parliament, not those of that Executive. That is why I believe this Bill is so important and why it has garnered the support of so many hon. and right hon. Members on both sides of the House, and it is why I hope the House will allow it to go forward today, so that we can perhaps make progress, even in the short time left available in this Session of Parliament, towards restoring some faith and credibility in this House.
	 Question put and agreed to.
	 Ordered,
	That Mr. David Heath, Dr. Tony Wright, Mr. Michael Howard, Sir Menzies Campbell, Mr. Graham Allen, Mr. Iain Duncan Smith, Sir Alan Beith, Angus Robertson, Andrew Mackinlay, Mr. Richard Shepherd, Paul Rowen and Sir Nicholas Winterton present the Bill.
	Mr. David Heath accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 16 October, and to be printed (Bill 130).

Stephen Timms: The amendments and new clauses in this group all concern tax avoidance. For the tax system to be effective everyone needs to pay their fair share. Tax avoidance damages the ability of the tax system to deliver its objectives, imposes big costs on society and shifts a greater burden of tax on to taxpayers who do comply with the rules. So the Government are committed to continuing to move quickly and effectively to tackle tax avoidance in all its forms.
	What I shall do, if I may, Mr. Speaker is speak to the Government new clause and amendments in this group and seek to catch your eye later to respond to comments made by others when they discuss the other new clause and amendments. New clause 8 counters an avoidance scheme that has been notified to Her Majesty's Revenue and Customs. The scheme exploits corporation tax "terminal loss relief" rules that allow losses arising in a trade in the 12 months prior to cessation to be carried back and set off against profits made in the previous three years. The scheme works by artificially engineering a deemed cessation of trading, which allows the company to access the relief in circumstances not intended by Parliament, and it could be used by a large number of companies and it poses a risk of significant loss of revenue. In order to stop companies exploiting the scheme and, thus, to protect the Exchequer, I made a written ministerial statement on 21 May announcing our intention to introduce this legislation.
	The new clause addresses situations in which there has not been, in any real sense, a cessation of the trade, but where it is claimed that the cessation occurs as a result of the trade being transferred to a person outside the scope of corporation tax. The new clause is targeted only at avoidance and applies only where it can be established that the reorganisation concerned is part of a scheme or arrangement, one of the main purposes of which is to access terminal loss relief. In such circumstances, terminal loss relief will not be available to the transferring entity. The new clause provides vital protection to the Exchequer from wholly artificial avoidance schemes and does so in a targeted and proportionate manner. I therefore ask hon. Members to ensure that the new clause stands part of the Bill.
	Government amendments 41 and 42 seek to ensure that clause 59, which contains a provision to counter an avoidance scheme that abuses the double taxation relief rules, does not hit any unintended targets. Following representations, Government amendments were tabled in Committee that were intended to ensure that the clause would not have an unintended effect in normal commercial situations. The amendments would have provided that the clause applied only to payments made under the laws of a territory outside the UK. These amendments reflected agreement that HMRC reached with industry legal experts and had the advantage of following existing legal precedent that applies for the purposes of controlled foreign company legislation.
	The Government amendments would have covered the overwhelming majority of cases in which refund of foreign tax might arise from commercial contracts. However, after those Government amendments were tabled, further representations were received which showed that they may not go far enough to ensure that the clause does not hit any unintended targets. Although these are unusual circumstances, I said during the course of our debate on this clause in Committee that it is right that we should take account of them and that I would return to this matter with further Government amendments on Report—and I have done so.
	During the Committee debate, I made it clear that I accepted the principle of the similar Opposition amendments, but that I wanted to reflect further on the issue to ensure that any amendments were technically correct. The new Government amendments contain one minor adjustment, compared with the Opposition amendments in Committee, in that they refer to a "tax authority" rather than a "taxing authority". This is because a taxing authority might be seen as the legislative body which imposes the charge to tax, rather than the authority that assesses and collects the tax, and makes any necessary payments or repayments—a small but necessary change. The amendment has also been duplicated to cover the situation where the taxpayer is seeking a deduction for foreign tax, as well as where double tax credit relief is sought.

Stephen Timms: We have had an interesting discussion about new clause 5, on pre-commencement notification. The hon. Member for Dundee, East (Stewart Hosie) raised the matter in Committee, and I subsequently wrote to him to clarify the position.
	HMRC already operates a clearance regime under code of practice 10, to which the hon. Gentleman referred, in cases in which the application of recent legislation to planned transactions in uncertain. As we can all see, when legislation is new there could well be uncertainty about exactly what it means. In that situation, a clearance regime is appropriate so that people can discuss with HMRC whether the transactions described will work in the way that is intended, particularly in the case of larger businesses. Such businesses have access to a clearance system in wider circumstances, following the implementation of Sir David Varney's recommendations on HMRC's links with them.
	However, as the hon. Gentleman rightly said, HMRC will not entertain requests for clearance if it is obvious that the motive behind the application is to avoid tax. That policy is understood and accepted by the various professional bodies, and it is well established. I suggest to him that there is no good reason to change the policy on a situation in which disclosure will, by definition, involve arrangements that are intended to obtain a tax advantage as a key benefit.
	I agree with the hon. Member for Fareham (Mr. Hoban) that the problem is that if such a facility were offered in practice, scheme promoters would take advantage of it by continually devising variations on schemes and making more changes to them until they eventually found one that worked. We would all agree that avoidance is not acceptable behaviour, and that we should not effectively ask HMRC to become complicit in avoidance by offering its promoters such a refinement service, which I fear is what would happen.

Stephen Timms: That is a matter for HMRC, but I am sure that the right hon. Gentleman has seen the code of conduct for bank tax, which we published recently for consultation. Undoubtedly, some of the activities of banks in the UK have involved avoidance—in some cases, significant avoidance. Banks are in a strong position to indulge in that sort of behaviour because they can do it for their own part and then advise their clients on similar approaches. I agree with the right hon. Gentleman that it is right to be vigilant about banks' tax submissions, but if he takes the opportunity to read the code of conduct that we have published for consultation, he will see the steps that we are taking to make progress on that.
	Information provided by a promoter is often insufficient to tell HMRC whether the scheme will work. In some cases, the scheme will turn on a novel interpretation of the law and, in the end, that can only be tested in the courts. It is not enough in some circumstances for HMRC to examine the scheme and decide whether it will work. Ultimately, it will require a decision by a court. In other cases, a scheme's effectiveness will depend on the specific facts to which it is applied. In those circumstances, HMRC could be in a position to say whether the scheme works only when it features in a tax return. Providing the clearance under new clause 5 could therefore prove difficult.

Stephen Timms: My hon. Friend is right. That is precisely the danger to which new clause 5 could give rise, with the difference that building something or progressing with a development is, in principle, good and laudable, whereas avoiding tax is not. There is therefore an even stronger reason not to follow that route.
	New clause 5 states that HMRC will have a "reasonable" amount of time to comply with the clearance request. Again, I agree with the hon. Member for Fareham. What constitutes "reasonable" in that context? It can take a considerable time before HMRC is in a position to make such a judgment and it could easily be impossible to do that in a timeframe that might be considered reasonable by the taxpayer. I therefore question the usefulness of that sort of clearance to those who are genuinely trying to pay the right amount of tax at the right time, and I strongly argue against adopting the new clause because it would help those whose purpose is purely and clearly to avoid tax. As I said earlier, however, that is not to say that I want to close the door on tightening the disclosure arrangements. Indeed, there may be opportunities for us to do that.

Stephen Timms: I share my hon. Friend's concern about what we might find ourselves getting into. On the other hand, however, I suppose that one could argue that charging for the service might add a further degree of legitimacy to activity whose illegitimacy one would otherwise want to underline throughout. However, we should not be giving that kind of advice at all, so for now we can perhaps leave the question of whether it ought to be charged for.
	Let me respond to another point that the hon. Member for Dundee, East made. HMRC receives a significant number of disclosures every year, but only a proportion of those lead to legislative measures. He raised the issue of promoters selling abusive tax avoidance schemes. As he will know, we have announced that HMRC will take forward discussions to improve the avoidance disclosure regime. There may well be things that we can do, and HMRC is consulting on working with tax agents.
	That brings me to the points made in this debate, not least by my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher), about having a general anti-avoidance rule. Let me say to my right hon. Friend and the House that we want to keep that question under review. It was consulted on in 1998, as was said by the hon. Member for Stockport—

Frank Field: I have been in the House for 30 years, and have moved many motions on new clauses and many amendments. I have always taken real pleasure in doing so, but I cannot say that I take much pleasure in moving this new clause, or from the feeling that we are somehow on course for a collision with the Government over the treatment of many people in our society who earn low wages.
	Political parties, whatever part of the House they occupy, are broad coalitions, containing people of divers views, but they also have core values which keep them together. There is clearly a huge divergence of views on the Labour Benches among Members who have been in the House for some time and those who have arrived more recently, and among those who think of themselves as traditional or old Labour, those who think of themselves as new Labour, and those who simply think of themselves as Labour. However, the golden thread that links us together is that, when push comes to shove, we are all on the side of the poor.
	The Government have taken a number of measures of which Labour Members, and, I hope, those in other parties, can be proud. They have tried to move life chances towards those who generally have least, and, if need be, away from those who find it easiest to make it to the top. Therefore, there was in the beginning puzzlement, which turned to anger, that in the 2007 Budget the Government announced the abolition of the 10p starting rate of tax accompanied by a 2p reduction in the standard rate of tax. Since coming to this House I have been an advocate for cutting taxation and particularly the direct rate of tax, the headline rate with which the people whom I represent are massively concerned. It determines whether they take a job, whether they work longer hours and so on.
	I was staggered, as were other hon. Members, that that 2p reduction in the standard rate of tax was largely—although not totally—paid for by the abolition of the 10p starting rate. The cost of the 2p reduction was about £9.5 billion; the extra revenue from abolishing the 10p starting rate was about £8.5 billion. We found ourselves for the first time that I can recall advocating a measure that increased the tax burden on the lower paid and made it easier for people such as me, other Members and millions of people outside the House of Commons. It flew in the face of our understanding of what Labour is about: being on the side of the poor.
	It is true that it took a little time for Treasury Ministers to recognise that there was not just an issue here, but that it was something that cut to the quick most of us who have devoted our lives to public service. We were anxious to see measures that would offset, as far as humanly possible, the additional tax burden that we had placed on the people taking home the smallest wage packets. The Government, to their credit, have introduced a number of such measures. They have changed benefit rates and protected those over retirement age who would have lost out by increasing the tax allowances, so that the sums they would lose would be met. I note that others may wish to raise the fact that those who retired before 65 would not receive the same protection as older people, such as me.

Frank Field: I am sure that those sentiments are reflected on both sides of the House. The disappointment that I feel can be summed up as follows. I am not trying to decry the moves that the Government have made to try to rectify the unnecessary burden that we have placed on some of the poorest households in this country—a burden that would be unforgivable if it were a Tory Government doing it, and is even worse because it is our Government. Of course there are real problems now with the Government finances. I am even more of a hawk on this issue than those on the Treasury Bench, because I think there will be real problems in the short term in trying to float the gilts that we will need to float to reach the medium term, unless both Front- Bench teams show far greater resolution about the need to bring public expenditure into line with tax revenue. I want us to lead that debate because the sorts of reforms that I wanted to see and that we did not see in the last 12 years or so, when we had huge amounts of money to spend, might well be brought about when we have to think about what the Government's priorities are and how we can ensure that our resources are concentrated on them.
	I am not trying to downplay the real difficulty that the Government have in balancing the books and getting us to the medium term so that some of these changes in public expenditure and taxation can come into effect. The sums that we talking about to bring justice to the group of people who earn the least are modest compared with the size of the deficit that has been revised, in a major way, three times since last November. I cannot believe that there would be any risk to the currency or any risk of encouraging a gilts strike if the Government were to make modest new claims on debt to meet the honour that we owe this group of our constituents.
	I said at the beginning of my speech that for 30 years I have spoken always with pleasure, jumping up to make a suggestion and thinking that it would be somehow be accepted. I know, however, from the conversations that other Members have had with the Government that the Government have dug in on this point. They are playing for very high stakes tonight. I hope that when those on the Treasury Bench contribute to the debate they will say more than we have heard from the unofficial sources during the day. If all we are offered, yet again, is warm words, my thinking is that we should press the new clause to a Division.

Mark Hoban: That obligation rests with the Minister; he is in government, not the Opposition. We look to him to bring forward proposals to deal with the issue. The Government created the problem, and they need to solve it. They need to live up to the promise that they made in the House.
	Let me move on—

Mark Hoban: The challenge is that the Government already recognise that there is a problem. I noticed earlier that the right hon. Member for Liverpool, Wavertree (Jane Kennedy) was in her seat. Let me remind the House about what she said last year, when she was the Financial Secretary, in response to an intervention from the right hon. Member for Birkenhead; She recognised that there was a continuing problem and said:
	"I want to reassure him that we will return to this issue in the pre-Budget report, as the Chancellor has said, not only in front of the Select Committee but elsewhere. He will bring forward concrete proposals, and they will be implementable as soon as possible."—[ Official Report, 1 July 2008; Vol. 478, c. 741.]
	I thought that a very clear commitment, and I think that the right hon. Gentleman and a number of other Labour Members did too. It was on the basis of the right hon. Lady's reassurance that the hon. Member for North-West Leicestershire (David Taylor) withdrew his new clause at the time.
	So a year ago, a clear commitment was given by the then Financial Secretary—and by the Chancellor elsewhere—to compensate the 1.1 million households that had not been fully compensated. The clear message was that that would happen in the pre-Budget report. The pre-Budget report, of course, has come and gone without the package having been put in place, and that is why we are debating it today. There was an exchange of views between the Financial Secretary and the right hon. Member for Birkenhead about the number of people who had lost out through the scrapping of the 10p rate. The IFS estimates that 0.9 million people are still worse off by more than £1 a week as a consequence.
	We are here to press the Government to come forward with proposals that will compensate those who were not fully compensated as a result of the proposals announced in May last year. The Government cannot cast aside lightly, and without any consequence, the commitments made in last year's debate and by the Chancellor. Having started this process in 2007, having denied that there were losers despite the evidence, having made a concession under pressure last year, and having defused a revolt at the Report stage of the Finance Bill in 2008 by committing to act in the pre-Budget report and yet failing to do so, it is time for the Government to be held to account by Parliament.
	This is not a partisan issue—it is about the House asserting itself and forcing the Executive to live up to the promises that they made to this legislature last year. It is time for the Government to redeem the promise that they made. They have had time to reflect on how to compensate the people who were not fully compensated last year, and to bring forward measures to help those people; in failing to do so, they have broken their promise to the House. We now have the chance, by supporting new clause 1, to force the Government to keep to their promise not only to Members of this House but to the people who have lost out as a consequence of the scrapping of the 10p rate.

Jeremy Browne: I am grateful for that intervention for two reasons. First, amendment 37 does precisely what the hon. Lady said, so I look forward to her supporting it. Secondly, she leads me neatly on to the comments of the leader of the Conservative party. In response to the rabbit that the then Chancellor pulled out of a hat, he said:
	"Well, the Chancellor has finally given us a tax cut."—[ Official Report, 21 March 2007; Vol. 458, c.829.]
	Sadly, perhaps not for the first time, he was mistaken. We had, not the abolition of the 10p rate—the term often used to describe the change—but the doubling of it. That left more than 5 million people worse off than they were before the change was made.
	It was argued at the time that simplification was the motive for the change, but as the hon. Member for Wolverhampton, South-West (Rob Marris) rightly pointed out, the system has not become simpler. Indeed, since that Budget, the income tax system has become, if anything, more complicated.
	What happened after that Budget? We finally got the now Prime Minister to accept that there were more than 5 million losers as a result of the change. Initially, he refused to accept that there were losers, and when we got beyond that stage, there was willingness to acknowledge that there were losers but unwillingness to consider compensating them. It seems extraordinary now, but we were told that the size of the budget deficit made it impossible to afford to compensate them. I think it was probably a combination of not wanting to spend the extra money and stubbornness—an unwillingness to believe that the Government had been caught out in an error of such magnitude.
	The decision was then taken in an emergency Budget—that is what it was, in all but name—to borrow some additional money to try to buy off the right hon. Member for Birkenhead and other Labour Members who had suddenly realised, to their horror, that far from being a masterstroke, the measure not only further impoverished some of the poorest in their constituencies, but was likely to be electorally disastrous. This afternoon, we are joined by the hon. Member for Crewe and Nantwich (Mr. Timpson), who offered a vivid illustration of the perils that the Labour party faced if it pretended that the measure was anything other than unpopular.
	I slightly disagree with the hon. Member for Stoke-on-Trent, Central (Mark Fisher), when he asked whether people were always aware of the impact of such changes on their income. I was struck by the fact that members of the London-based media, for want of a better expression, were slow to pick up on how damaging the change was, probably because they are invariably paid far more than those in the losing category. However, my constituents were alert to the downsides. I have been stopped in the supermarkets and in the street more about that issue than about any other in the four and a bit years that I have been a Member of Parliament. They said, "I hope when you're up in the House of Commons you're holding the Government to account on doubling the 10p rate because I'm losing out as a consequence."
	It is also inaccurate to suggest that the measure damages only those on low incomes. Sometimes debate in the House is caricatured as being about us, on our MP incomes, benevolently trying to help people in circumstances of extreme poverty. Some people on very low incomes lost out as a result of the Government's doubling the 10p rate, but many of my constituents, who are on incomes of £13,000, £14,000, £15,000 and £16,000—regarded not as low, but as typical wages for people who work in agriculture, catering or hospitality in Somerset—were also losing out, even when the effect of reducing the basic rate by 2p was taken into account.

Bob Spink: I am grateful to hon. Gentleman, who is making a remarkably balanced speech and making a lot of sense. Will he share with the House his party's view of increasing personal allowances, but balancing that by increasing the higher rates of tax, so that we properly target the vulnerable and poorer people in society, which is the right thing to do?

Jeremy Browne: I am grateful to the hon. Gentleman as well. I am building up an unlikely coalition behind amendment 37, which is precisely what I seek to achieve. I will get to that very amendment in moment and speak to it in slightly greater detail. The situation that I have outlined was the one that the Government faced, and the calculation made was essentially a political calculation.

Jeremy Browne: My view, for what it is worth, is that the Treasury and Treasury Ministers knew perfectly well and were quite cynical in their calculations, for the reasons that I have just given. However, I think that quite a lot of Labour MPs suspended their judgment and only later came to realise the full and awful consequences of what the then Chancellor had announced. Those consequences were awful for two reasons: first, because they fundamentally undermined what those hon. Members had come into politics for, which was to try to help people on lower earnings; and secondly, because those hon. Members realised that it would be devastating for them electorally when the electorate woke up to those consequences.

Jeremy Browne: That is an interesting point. I will not be tempted too far off the beaten track, Mr. Deputy Speaker, but when people come—very soon—to write the history of new Labour, the 10p tax rate will be the watershed moment, when the Labour party tried to triangulate its way to the right of the Conservative party, in an attempt to crowd it out and leave it no room to have any electoral appeal. However, that was dependent on the left, as it were, not minding about all the efforts to woo middle England, which sometimes meant neglecting Labour's core vote, and on other occasions meant actually punishing it. The 10p tax rate was the moment when the elastic stretched too far. The interesting point about that decision was that it was announced in the final Budget speech by the then Chancellor. That speech was meant to set up his premiership and begin a new era of new Labour, but as we now realise, it did precisely the opposite: it signalled the end of new Labour and the start of the desperate circumstances that the party of Government has been in ever since.
	The new Chancellor of the Exchequer was left in a difficult situation. We all have sympathy for him, just as we have sympathy for the team of Ministers who have to stand up in this debate and justify the position in which the Prime Minister has put them, because it is hard to unravel the proposal without just reverting to the previous situation. Indeed, with the Prime Minister having announced that the 10p rate was an interim proposal and is now in the distant past, the Government are unable to move back to the situation that existed before. What they have tried to do, therefore, is address the concerns raised by the right hon. Member for Birkenhead and others by spending a lot of public money—more public money, interestingly, than it would have cost to revert to the previous situation—targeting those who were losers as a result of the 10p rate.
	However, the problem is that it is hard to do that precisely. What the Government came up with, in their emergency mini-Budget, was a £2.7 billion package, which, extraordinarily, gave money to people earning £20,000, £25,000 or £30,000 a year. Indeed, somebody earning £35,000 a year would have gained from the emergency proposals, whereas somebody on a much lower income would still have been a net loser as a result of those changes. The Government found that £2.7 billion out of nowhere and then blew the vast majority of it on people who were not net losers as a result of the change from 22p to 20p in the basic rate, coupled with the doubling of the 10p rate. That was the most extraordinary act of extravagance, but it was very badly targeted. The proposal was simple to implement, which was its one merit, but it otherwise failed in its objectives.
	Where does that leave us now? It leaves us in an interesting position, questioning the Prime Minister's judgment and the party of Government's overall strategy and direction; it also leaves us doubting Labour's ability or desire to help the poorest in our society. Indeed, one interesting thread that runs right through the Bill is the number of measures that it contains that are disadvantageous to people who, in other circumstances, might have thought that the Labour party was on their side. It is interesting, for example, that the group targeted for gambling taxes are the people who play bingo, that there is extra duty on a pint of beer and that people at the lowest end of the income scale have not been compensated for the changes that we are discussing in relation to new clause 1. It is hardly surprising, when one looks at those measures, that so many people across the country are concluding that the Labour party, despite its historical record of commitment to them, no longer appears to be particularly interested in helping them in future.
	That brings me neatly on to amendment 37, which is the sort of enlightened, progressive measure that people may have thought the Labour party would have championed in the past, but which they have long since given up hoping it will support in future. However, amendment 37 has been put forward by the progressive voice of British politics, which is me and the Liberal Democrats. It is a straightforward measure of the kind that would find favour with the right hon. Member for Birkenhead, who spoke about the need to cut taxes for people on low earnings, which is precisely what we seek to do.
	Amendment 37 would raise the personal allowance—the segment of one's income on which one pays no income tax at all—from the current figure of £6,475 in a financial year to £10,000. That would effectively implement a cut in income tax of £705 for anybody earning more than £10,000 a year, but it would also take out of tax altogether 4 million people whose income is above the current threshold but below £10,000. I do not pretend that amendment 37 is a cheap measure. It would cost billions of pounds to implement, which is why my party has identified a range of different ways of funding it. I could go into those at length, but as I talked about them in Committee, perhaps I will not detain the House today.
	Before I conclude, however, let me talk about the motive, which is the important feature. In supporting new clause 1 and tabling amendment 37, my party is trying to do two things. The first is to help people on low incomes to stand on their own feet and be less reliant on the state. We realise that everyone needs assistance, and that people on low incomes need it most, but it is perverse to take money away from people in taxes and then reimburse them through some complicated mechanism elsewhere in the system. Our desire is for people to have an incentive to work because they get to keep more of their income, and to be more self-reliant than they would otherwise have been. We feel that that goes with the grain of human nature and that it is good for people in those circumstances. In the present recessionary environment, it is particularly desirable for people to have greater incentives to work and for those at the bottom end of the income scale to be able to keep a bigger share of their earnings.

William Cash: It is said, "For whom the bell tolls"—well, there is no question but that the bell tolls for new Labour on this proposal. The Government have turned the values of new Labour and old Labour upside down by what they have done. To those who think that the vote by the Conservative party has an element of cynicism about it— [Interruption.] No, not at all. To those people I say that one of our greatest Prime Ministers, Disraeli, wrote a tale of two nations in the book "Sybil", which set out for its time the way in which Governments, as in our own time, create divisions in society by arrangements of this kind. The Government's proposals are totally unacceptable.
	Many people in our constituencies are deeply affected by those proposals. People in rural areas, for example, suffer from increasing poverty; dairy farmers in my constituency are similarly affected. Small businesses and individuals are going bankrupt under the burdens they are suffering under the present economic recession. It has been suggested today that the number of unemployed might be as many as 3.2 million next year. That is the reality of the direction in which the economy is going, as taken by this Government.
	While the Government bail out the bankers, the poor are battered by the proposals on the Government's agenda. There are broken promises, and it is down to Parliament to deal with them.
	The hon. Member for Stoke-on-Trent, Central (Mark Fisher) said that it was time to put Parliament first. Let me add to what he said: it is time to put people and Parliament first. That is what we must do, and that is what the proposal from our Conservative side of the debating Chamber must deliver tonight. The good and honest Members on the Labour Benches have evaluated the meaning of Labour for their own people, and we will do the same for our people. We have constituents who are equally poor and who need to be protected, and I believe profoundly that we have a duty to support them tonight.
	In an intervention earlier, I referred to the big landscape against the background of the actual figures of debt. The Government continually insist on a figure of £1 trillion, but according to the Office for National Statistics, and as I have said since 7 October last year—ably supported by other Conservative Members who insisted that the Government's figure was a complete fabrication—it is £3 trillion. The impact on the economy will be huge, and hence the impact on the very people whom we are trying to protect tonight will be all the greater, given bankruptcies, increased unemployment, greater rural poverty, and greater problems for the elderly. We must give help to those people, in conjunction with the help that can be provided by credit unions and the like, which I hope to encourage in my constituency. It is no good bailing out the banks when the people at the lower end of the scale will be worse off.
	It is essential that we vote tonight, and show the less well off in our constituencies that we are prepared to protect them. The other day, my right hon. Friend the Leader of the Opposition talked about the potential for riots. When the scale of a problem presented by proposals such as this causes such a reaction among the people who will be affected, we can be in no doubt that there will be serious trouble by the middle of next year. It is therefore essential for us to introduce remedial measures to ensure that the poor are not affected by the Government's proposals.
	The landscape of the total debt figure is so huge, and the impact that it will have on the man in the street at the lower end of the income scale is such, that we must do all in our power to ensure that we protect people. By voting as we will this evening, we will guarantee that protection.

Diane Abbott: Does my hon. Friend agree that there has been some talk in the past 48 hours that if this new clause is passed tonight, the following morning the Government will not be able to collect taxes, the markets will crash and Government will grind to a halt? Does he not agree that these are tales to frighten children and that people should decide to vote tonight on the merits of the arguments and not on implicit threats from Treasury Ministers?

Frank Field: There is clearly something wrong with our procedures when Members who wish to reform a Budget constructively have to resort to tabling a new clause that, according to my right hon. Friend, will blow the House and everything else asunder if we press it to a vote. It is very significant, however, that he did not say in response to the intervention of my hon. Friend the Member for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) what would happen if we passed the new clause. We all know perfectly well that we are not rejecting the Budget. We are not rejecting these powers; we are putting a temporary hold on them. Let us suppose, however, that my right hon. Friend is right about the outcome. We know perfectly well what any rational, sensible Government with a real wish to live would do. They would immediately come back and say that they would have vote of confidence now and insist that it is passed, and one would hope that, with a little humility, they might come back with the measures we are all asking for.
	This debate has been quite a simple one, although it has taken a long time. When I opened it, I said that although there were different views among those on this side of the House—those of old Labour, new Labour and just Labour—the great golden thread that linked us all together and sent us here in public life was the desire to protect the poorest. We might have disagreed about everything else, but that was sacred to us. This 10p measure that the Government introduced has tried to break that golden thread.
	Of course, the Government have taken some measures, but they have not taken a single measure that specifically helped those who lost out by the abolition of the 10p rate. The Government have taken other measures that have benefited taxpayers generally, including those who were losers from the abolition of the 10p rate, but they have taken no specific tax measure to compensate that group. Tonight is our last opportunity to say to the Government that they need to renew their faith and our faith in the tradition that sent us here, so that when we go into that general election—

Jeremy Browne: My first concern is that I take seriously the speeches of the right hon. Member for Witney (Mr. Cameron); I have no reason to believe that he means to mislead anybody. He made a big speech to the think-tank Reform. I serve on its advisory board, so I had a direct interest in what he said. Yesterday, the right hon. Gentleman spoke about the great threat posed to the public finances of the plethora of quangos, which cost a huge amount to administer. When I heard that I thought, wow, here we have a substantial policy—something that I can really latch on to. I have always struggled to get a real feel for what the right hon. Gentleman believes, but yesterday I thought that, now, he had raised a tangible issue that meant something. I can tell that Conservative Front Benchers intend to follow that theme through in the House of Commons—lots of amendments and new clauses will be tabled to flesh out the agenda to remove the quango state.
	But then I come here on the following day and, although I appreciate that all new clauses had to be tabled before the right hon. Gentleman made his speech, I find a Conservative new clause that proposes a new quango. I ask the hon. Member for South-West Hertfordshire (Mr. Gauke) this very simple question: how much would the head of the quango be paid? We could get into a bigger conversation about the overall cost, because I assume that it would need a secretariat, central London offices, and a new logo. The Conservatives would want its representatives at their party conference, so they would charge the quango lots of money to host fringe meetings there. It would have an entertainments budget—

Colin Breed: Is not the crux of the matter not simplification but fairness? In an attempt to try to make things fairer for people, there are necessarily some complexities. I, for one, would much prefer to have a fairer tax system, even if that made it mildly more complex. When people look at their tax paperwork, they often compare what tax they are paying with that paid by other groups. While complexity can cause difficulties when we are looking to achieve competitiveness and so on, we should be aiming for a much fairer system, even if, at the end of the day, it is slightly more complex.

Jeremy Browne: That is a particularly good point. My hon. Friend may have ruled himself out of the lavishly paid job as part-time chairman of the office of tax simplification, but given that he is not a member of the Conservative party, perhaps he would not have been considered for that role in any case. He makes the entirely reasonable point that although simplification of the tax system is desirable, in a complicated economy it is inevitable that some complexity is needed to ensure that the system is progressive and treats people fairly.
	I spoke about new clause 24 in Committee on 25 June. I am pleased that the Conservatives were impressed by my contribution and felt moved to follow suit in their amendment. Is the possibility that the favourable status enjoyed by furnished holiday lettings may not be compliant with European law sufficient reason to introduce the proposed change? That issue is still hanging over the Government. It would be better if we were more certain about whether we are required to make this change, not least because the Government appear to have acknowledged that they did not consult the Department for Culture, Media and Sport and have not made any intelligent impact assessment of whether the measures would be damaging, particularly to rural and seaside communities in areas such as those in the south-west. It is safe to say that there probably would be an adverse impact, but I am not sure that the Government know precisely what it will be, but surely they should know that before they propose any such measure.
	New clause 6 is self-explanatory. We are all in favour of competitiveness, although the form that the proposed report took would dictate how interesting or useful it would be.
	Amendment 36 would target some additional assistance, at very modest cost, at very small businesses. A form of relief is available to companies with a profit level of less than £300,000, but there are a lot of companies within the range of zero profit to £300,000 profit, and that is quite a big gap. I know that the hon. Member for Northampton, South (Mr. Binley) takes a keen interest in these matters, but it is worth repeating a couple of statistics. According to the Federation of Small Businesses, there are 4.7 million small businesses in the United Kingdom. Ninety-seven per cent. of firms employ fewer than 20 people, and 95 per cent. of firms—19 out of every 20—employ fewer than five people. Cumulatively, those very small businesses are making a significant contribution to the well-being of the economy and to overall employment levels. The amendment would target some additional assistance at companies making profits of less than £25,000—very small, almost micro-businesses would benefit from some additional assistance to help them to get on their feet, to stay profitable and, in time, to grow into bigger and more profitable organisations. It asks the Treasury to consider how that could best be achieved, so it is not excessively prescriptive, although the regulations would require an affirmative resolution to be brought into effect. On that note, I look forward to hearing the Minister's contribution.

Brian Binley: Of course, it is the Financial Secretary's job to paint everything in the garden as rosy, but does he acknowledge that "Tolley's Yellow Tax Handbook" had 10,134 pages in 2008 and 4,998 pages in 1997, and that the page lay-out has been changed to get in more words? Is that a rosy situation?

David Gauke: The Minister's view of the UK's taxation system is frankly complacent. Professional groups and business organisations have expressed genuine concerns, yet the Government appear to be distant from the real world. I would advise both the Minister and the hon. Member for Taunton (Mr. Browne) to read carefully the speech by my right hon. Friend the Leader of the Opposition, who set out a compelling case for bringing in outside organisations to provide technical expertise to Departments, which is exactly what the office of tax simplification would be. I note that the hon. Gentleman said that he was in favour of simplification, although it was not quite clear why he appears not to be in favour of establishing an office of tax simplification, which would be widely welcomed by many professional groups and business organisation. As a consequence, I intend to press new clause 3 to a vote.

Clause 3
	 — 
	Personal allowance for 2009-10 for those agedunder 65

Jeremy Browne: I completely accept my hon. Friend's point. Let me illustrate my acceptance of his point with an example from my constituency. One of the games widely played in pubs in Somerset, as my hon. Friend the Member for Somerton and Frome (Mr. Heath) will be aware, is skittles. I am a keen player of skittles and people associate skittles with rural pubs. There are skittles leagues and teams attached to village pubs across Somerset and other parts of the west country.
	I recently had the pleasure to visit, as a customer, the Oxford Inn in Halcon in east Taunton, one of Somerset's most urban and socio-economically poorest parts. It has a skittles alley and offers all sorts of entertainment and social events, and it also puts on food buffets built around people's enjoyment of skittles and other activities. The points that I am making are not exclusively true of rural areas: they are very much true of rural areas, but they apply to urban and suburban areas as well.
	I promised my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) that I would talk about the breweries in my constituency. I do not want to let her down by neglecting to take up her invitation.
	There are four beer brewers in my constituency, and a BrewFest is taking place in Wiveliscombe in my constituency later this month. That will be an opportunity for people from all over that part of Somerset, and even perhaps from Devon, to visit Wiveliscombe and enjoy the beers brewed there by Cotleigh Brewery Ltd and by Exmoor Ales. Both produce large numbers of popular beers for pubs and off licence sale, in my constituency and further afield.
	The other two brewers in my constituency are much smaller. Confusingly, Quantock Brewery is based not in the Quantocks but in a place called Chelston just outside Wellington, while Taunton Brewing Company is not in Taunton but in West Bagborough—

Jeremy Browne: Sadly, Madam Deputy Speaker, that is the sum total of breweries in my constituency, but I am doing my best to make setting up new ones an attractive proposition for people.
	My point is that all those breweries are directly affected by reductions in beer sales. That may sound like a statement of the obvious, but we tend to concentrate on the business at the end of the supply chain—that is, the pub landlord selling a pint of beer to the customer—but the breweries are also employers in my area. They are more than just employers, too, as they are also part of the heritage and fabric of the area.
	People in Taunton Deane or Somerset as a whole enjoy having their local breweries, believing that they add to the character of the community and that there is something distinctive about them that helps to define our area. Indeed, people visiting on holiday from London, Birmingham or elsewhere in the country feel that having an opportunity to drink in a pub in my constituency a pint of beer that has been brewed in Wiveliscombe or somewhere else in Somerset is part of their enjoyment as a visitor to the county. It would be extremely sad if that were to be affected.
	As I said, I accept that people can choose soft drinks, wine or something else instead of beer. I am not trying to compel people to drink beers brewed in breweries in my constituency, although I sometimes think that they would benefit from the experience. It may be that their life would be poorer if they missed that opportunity, but I am not compelling anyone to drink them. What I do not want, however, is businesses to be placed in jeopardy as a direct consequence of the Government's imposition of above-inflation duty increases on beer.

Jeremy Browne: I will, but I am trying to put in place a simple measure to do precisely what the hon. Gentleman says. If the Government were to feel that the amendment was technically deficient, I would be happy if they sought to make changes to it. As has happened in previous years when emergency measures have been introduced in the PBR, more emergency measures could be brought in this autumn, if the Government felt that they were needed.
	The simple fact is that the Government are increasing beer duty by 2 per cent. above inflation every year—the so-called duty escalator, as I have said. The amendment would not change the duty for this year, as that has been passed and set in stone already, but it would reduce the duty by 2 per cent. next year and in subsequent years. What I am effectively trying to do, and I hope the mechanism achieves that objective, is to cancel out the effects of the so-called escalator which, for the reasons that I have given, I regard as damaging.

Greg Hands: It is always a pleasure to follow the hon. Member for Taunton (Mr. Browne). I, too, will be celebrating Proud of Pubs week on the same evening, but almost certainly in a different establishment. I enjoyed sparring with the hon. Gentleman in Committee on this and many other duties. I agreed with a great deal of what he had to say; I just thought it a pity that he did not properly explain the amendment before us, because it has a number of problems that need probing.
	Nevertheless, we seem to be making a habit of debating alcohol duty only very late at night or at the end of the day. [Hon. Members: "Last orders!"] Last orders indeed, although not quite, under the old world. During Committee of the whole House on 12 May, I spoke on alcohol duties for an hour and a quarter either side of midnight—well after what I used to think of as closing time. I shall not repeat my arguments and certainly will not go on for as long, but we had an entertaining debate about the serious subject of alcohol duties, and various Members joined the debate late, including the hon. Member for Morley and Rothwell (Colin Challen), who intervened on a Liberal Democrat Member at 2 minutes past 1 in the morning to say that
	"the increase in duty on beer imposed in the Budget is 1p. In my local, which I attend regularly—I do not know whether the hon. Gentleman attends his—the price of a pint has gone up by 10p."
	He went on to ask at 6 minutes past 1 in the morning:
	"How does the price of whisky, with which I must admit I have a certain affinity, compare with the RPI?"—[ Official Report, 12 May 2009; Vol. 492, c. 822-823.]
	We had various other contributions from a collection of Members from all-party groups, some of whom appeared to have come straight out of intense discussions on the various duties involved. I do not know whether we can expect such interventions this evening, but alcohol duties are a serious matter, affecting not only a huge number of consumers but a large number of employers and employees. There are also issues about problem drinking and alcohol-induced crime.
	The hon. Member for Taunton pointed out that the sector is under pressure, and on that point I very much agree. Part of that tale of woe is due to the big increases in beer duty, so let us examine what the Government have done since they introduced their duty escalator at the previous Budget. They put duty up across the board by 6 per cent.; then it went up again by a further 8 per cent. when VAT fell in the pre-Budget report; and we now have a 2 per cent. across-the-board increase in this year's Budget.

Greg Hands: The hon. Gentleman makes a good point, although we must recognise that there are difficulties concerning the duty regime on beer and other alcohol served in pubs, vis-à-vis supermarkets. Nevertheless, he makes a strong point, which we would like to look at.
	We have not spoken about amendment 38 in any detail. As the hon. Member for Taunton knows, I pay close attention to the text of his amendments, and I have to say that his amendment would insert its new clause 3A in the wrong place. It would insert his reverse beer escalator in line 34, between two subsections on low and medium-strength cider. It should actually be inserted in line 30. Furthermore, the Lib Dem amendment, taken in totality with the Bill's existing provision on beer duty, would see beer duty first rise this year by 10.5 per cent. and then fall each year by 2 per cent. because of that insertion into line 34. That seems an odd policy—less an escalator and more an escarpment, with a steep increase this year followed by a shallower descent for all years thereafter.

Sarah McCarthy-Fry: Because we work on a zero base. It is an increase of 2 per cent. on zero, and it would not go back below that figure even though inflation is negative, so it is staying at 2 per cent.
	As with all tax policy decisions, the Government will monitor the impact of alcohol duty, including the impact on the pub industry. However, I am sure that hon. Members will acknowledge—indeed, they have done so—that the competitiveness and employment levels in any industry depend on a large range of factors. The pub sector has been adversely affected by the economic downturn, as well as by changing tastes and lifestyles over a longer time period—nowadays there are many more ways to spend leisure time. Increased input costs for suppliers and the smoking ban have also had an effect. Changes in duty are unlikely to be the answer to tackling those problems. Indeed, the proportion of tax—duty and VAT—in the price of a pint of beer in a pub has remained broadly constant in real terms since 1994. In the Treasury Committee on 28 April, a member of the experts' panel, Mr. Weale from the National Institute of Economic and Social Research, said:
	"with beer...All the evidence is that"
	it is
	"not terribly price sensitive."
	However, the Government recognise and value the contribution that pubs make to employment and local communities. Although under EU tax legislation it is not possible to provide tax reliefs targeted specifically at pubs, such as taxing beer sold in supermarkets differently from that sold in pubs, the Government have introduced a range of measures to support all businesses, including the British pub. Those include: enabling pubs to spread payment of this year's inflation uprating to business rates over three years; HMRC's business payment support service, which has benefited many pubs already; improved access to finance for small businesses through the enterprise finance guarantee; and support through low-cost loans and advice on energy efficiency for small businesses, including many pubs, to make savings on their energy bills.
	An approach suggested by the industry has been a reduced rate for cask beer, which, again, is not currently possible under EU legislation. As many hon. Members will be aware, however, there is a planned review by the European Commission of EU alcohol rates and structures, which will provide an opportunity for the beer and pub industry to put proposals to the Commission on a reduced rate for cask beer.

Business without Debate
	 — 
	Delegated Legislation

David Davis: Four years ago today, this country suffered a terrible atrocity at the hands of terrorists: 52 people were killed and many more horribly injured. I stood at the Dispatch Box that day and spoke of the need to face down this barbarism. In the subsequent weeks and months, I was proud of the calm and just way that the ordinary British citizen dealt with this assault and of the comparative absence of people trying to make scapegoats of the ordinary, decent Muslim community. I was proud of the courage, sense of honour, tolerance and justice of our citizens at home.
	I am afraid that I cannot be so complimentary about the actions of our Government abroad. In the last year, there have been at least 15 cases of British citizens or British residents claiming to be tortured by foreign intelligence agencies with the knowledge, complicity and, in some cases, presence of British intelligence officers. One case—that of Binyam Mohammed—has been referred to the police by the Attorney-General, which implies that there is at least a prima facie case to answer. The most salient others include Moazzamm Begg, Tariq Mahmoud, Salahuddin Amin and Rashid Rauf, all in Pakistan, Jamil Rahman in Bangladesh, Alam Ghafoor in United Arab Emirates, and Azhar Khan and others in Egypt.
	For each case, the Government have denied complicity, but at the same time fiercely defended the secrecy of their actions, making it impossible to put the full facts in the public domain, despite the clear public interest in doing so. Although the combined circumstantial evidence of complicity in all these cases is overwhelming, it has not so far been possible—because of the Government's improper use of state secrecy to cover up the evidence—to establish absolutely clear sequences of cause and effect.
	In the case I am about to describe, we can follow the entire chain of events from original suspicion, through active encouragement of the Pakistani authorities to arrest and through the subsequent collaboration between UK and Pakistani agencies. This is the case of Rangzieb Ahmed, a convicted terrorist, whose treatment I can describe in some detail.
	As the House will realise, the account I am about to relay comes from several sources. I cannot properly give my sources, given the vindictive attitude of this Government, particularly the Foreign Office, to whistleblowers. Indeed, in this case of Rangzieb Ahmed, the authorities were so paranoid that they threatened to arrest a journalist for reporting facts stated in open court. Nevertheless, although I am prevented from naming my sources, I can say that I am confident of these facts beyond reasonable doubt. I will not, of course, disclose any names, or anything that discloses intelligence agency techniques—other than torture—or other issues that threaten national security.
	I should say that the individual whose case I am going to describe is not someone for whom I have any natural sympathy. He is a convicted—indeed, self-confessed—terrorist. So what I am talking about today is just as much about defending our own civilised standards as it is about deploring what was done to this man in the name of defending our country.
	In 2005-06, Rangzieb Ahmed was a suspected terrorist who was kept under surveillance for about a year before leaving the country to go first to Dubai and on a subsequent trip to Pakistan. During that time, evidence was collected against him, on the basis of which he was later convicted. Let me repeat that point, as it is very important to my subsequent argument—during that time, evidence was collected, on the basis of which he was subsequently convicted.
	Despite the authorities having that evidence, he was—astonishingly—not arrested but instead allowed to leave the country. To understand how odd this decision was, we should remember that this was only a year after the tragedy of 7/7, after which agencies were criticised for allowing terrorist suspects to leave the country to go to Pakistan. Since they knew he was leaving, since they knew where he was going, and since they had more than enough evidence to arrest him, allowing him to leave was clearly deliberate. That the authorities knew his itinerary is demonstrated by the fact that he was kept under surveillance when he was in Dubai. He later went on to Pakistan, where the Pakistani authorities were warned of his arrival by the British Government. The British intelligence agencies wrote to their opposite numbers in Pakistan—the members of the directorate for Inter-Services Intelligence—suggesting that they arrest him. I use the word "suggest" rather than "request" or "recommend" because of the peculiar language of the ISI's communication No doubt the Minister can confirm that for himself by asking to see the record.
	We also know that the intelligence officer who wrote to the Pakistanis did so in full knowledge of the normal methods used by the ISI against terrorist suspects that it holds. That is unsurprising, as it is common public knowledge in Pakistan. The officer would therefore be aware that "suggesting" arrest was equivalent to "suggesting" torture.
	Rangzieb Ahmed was arrested by the ISI on 20 August 2006. Once he was taken into custody in Pakistan by the ISI, the Manchester police and MI5 together created a list of questions to be put to him. MI5 arranged for those questions to be given to the ISI.
	Rangzieb Ahmed was viciously tortured by the ISI. He says, among other things, that he was beaten with wooden staves the size of cricket stumps and whipped with a 3 ft length of tyre rubber nailed to a wooden handle, and that three fingernails were removed from his left hand. There is a dispute between Ahmed and British intelligence officers about exactly when his fingernails were removed, but an independent pathologist employed by the Crown Prosecution Service confirmed that it happened during the period when he was in Pakistani custody.
	Rangzieb was asked questions, under torture, about the UK by ISI officers. He claims that he saw "UK/Pakistan Secret" on the question list used by the ISI. That was presumably the list put together by the Manchester police and MI5. After about 13 days, he was visited by an officer from MI5 and another from MI6. He claims to have told them, during questioning, that he had been tortured. They deny that, but it is significant that they did not return for further interviews. By that stage, MI5 policy was not to return after any interview in which the subject claimed that he had been tortured. The British agents did not return, but Rangzieb was subsequently questioned by Americans.
	Is it also an extraordinary, if sinister, coincidence that the Manchester police accessed Rangzieb Ahmed's medical records within days of the MI5/MI6 interview? Why would they do that if he was in perfect health?
	Rangzieb Ahmed was kept in detention by the Pakistani authorities for a total of 13 months—first at the ISI centre, then at Rawalpindi and then at Adiyala jail—before being deported to the United Kingdom in September 2007. He was tried and convicted of terrorist offences in late 2008—according to the prosecution, entirely on the basis of evidence obtained while he was under surveillance in the UK and Dubai in 2005-06. I cannot imagine a more obvious case of the outsourcing of torture, a more obvious case of "passive rendition".
	Let me recap. Rangzieb Ahmed should have been arrested by the UK in 2006, but he was not. The authorities knew that he intended to travel to Pakistan, so they should have prevented that; instead, they suggested that the ISI arrest him. They knew that he would be tortured, and they arranged to construct a list of questions and supply it to the ISI.
	The authorities know full well that this story is an evidential showcase for the policy of complicity in torture, should that evidence ever come out. One way in which the in camera veil of secrecy might be lifted would be a civil case by Mr. Ahmed against the Government for their complicity in torture. Part of that process would involve challenging the in camera rulings and revealing the details of agency involvement. Just such a case was being considered by Mr. Ahmed, and on 20 April this year he was visited in prison by his solicitor and a specialist legal adviser to discuss it.
	Mr. Ahmed tells us that a week later he was visited by an officer from MI5 and a policeman. That is the story told today on the front pages of the  Daily Mail and  The  Guardian. During the course of their visit they said that they would like him to help in the fight against terror with information about extremism. This is perfectly proper.
	However, the sinister part of this visit was an alleged request to drop his allegations of torture: if he did that, they could get his sentence cut and possibly give him some money. If this request to drop the torture case is true, it is frankly monstrous. It would at the very least be a criminal misuse of the powers and funds under the Government's Contest strategy, and at worst a conspiracy to pervert the course of justice.
	I would normally be disinclined to believe the word of a convicted terrorist. However, when he initially told his lawyer about it, he did not want to pursue the matter. Also, in common with many other criminals, after the scandal of the taping of the current Minister of State, Department for Transport, the right hon. Member for Tooting (Mr. Khan), on a prison visit, he believes all these meetings are taped and he says this will back him up.
	Given that belief, he is unlikely to have made an allegation that would be so easily proven wrong. I do not believe the conversation was taped, but it would have been videoed and this could be used to check his story. For reasons of policy and natural justice, it is imperative that the Crown Prosecution service investigates this allegation immediately, but that is not my principal concern today.
	My questions to the Minister are as follows. First, will he undertake to look at the in camera court records and the records of the police and intelligence agencies so that he can confirm for his own satisfaction that my account of the handling of Rangzieb Ahmed pre-trial is correct? That process should take only a few days. Secondly, will he publish the current guidelines governing the agencies handling the suspected torture so that we can see whether the UK authorities broke those guidelines or whether it was the policy that was at fault? The Prime Minister has undertaken to publish the new guidelines, so if the Minister cannot publish the current ones, can he explain why his approach is different to the Prime Minister's?
	Thirdly, I believe, but cannot be certain to an evidential level, that the judge in the court case intimated that disciplinary action should be considered within the intelligence agencies. Was this done? If not, why not?
	Finally, can the Minister now announce a proper judicial inquiry into the allegations of UK complicity in torture, since it is now clear that there is not just circumstantial evidence but hard evidence in government records for Ministers to read, if they had but eyes to see?
	Let me conclude by saying that our handling of the subject of torture has, in my view, been completely wrong. The Americans have made a clean breast of their complicity, while explicitly not prosecuting the junior officers who were acting under instruction at a time of enormous duress and perceived threat after 9/11. We have done the opposite. As things stand, we are awaiting a police investigation that will presumably end in the prosecution of the front-line officers involved. At the same time, the Government are fighting tooth and nail to use state secrecy to cover up crimes and political embarrassments to protect those who are probably the real villains in the piece—those who approved these policies in the first place.
	The battle against terrorism is not just a fight for life; it is a battle of ideas and ideals. It is a battle between good and evil, between civilisation and barbarism. In that fight, we should never allow our standards to drop to those of our enemies. We cannot defend our civilisation by giving up the values of that civilisation. I hope the Minister will today help me in ensuring that we find out what has gone wrong so we can return to defending those values once again.

Ivan Lewis: I begin by congratulating the right hon. Member for Haltemprice and Howden (David Davis) on securing this important debate. I believe that he has sincere, genuine and long-standing concerns in this issue and I will try to do justice to the points that he makes.
	I recall the responsible and non-partisan way in which the right hon. Gentleman behaved in the aftermath of the dreadful London bombings. He sought no political advantage, but sought to be a source of unity in this House and throughout the country along with my Front-Bench predecessors. Therefore, my only criticism of him this evening is that, during the course of the debate on these issues, he repeats unsubstantiated accusations as fact. That is a departure from the way in which he has sought to approach these issues in the past.
	I am sure that the right hon. Gentleman is aware that in both of the cases where these issues have been raised—one of which he has mentioned—the individuals concerned, Rangzieb Ahmed and Salahuddin Amin, have been convicted of terrorism offences and no evidence was found to substantiate the claims of UK involvement in mistreatment. Indeed, the gentleman to whom the right hon. Gentleman referred, Rangzieb Ahmed, was recently interviewed in his cell by  The Guardian with a Ministry of Justice press official present and the record of this is yet to appear in the media. The same gentleman has an outstanding application for leave to appeal, which, as an active proceeding in a UK court, cannot be referred to in any motion, debate or question, as you are fully aware, Mr. Speaker. Therefore, Mr. Ahmed's case should not be discussed further at present. In both cases, torture allegations were considered only to the extent that they were relevant to the criminal cases. Therefore, the degree to which they have been addressed should not be overstated. The right hon. Gentleman has brought these issues to the House tonight, but he is aware that I am very constrained in my capacity to respond directly to the accusations he makes. However, I will attempt to do justice to the general points that he has alluded to both in the past and in this debate.
	I want to place on record that the Government's policy is that torture is an abhorrent crime and we are fundamentally opposed to it. That principle guides all of the Government's work, including that of the intelligence agencies and armed forces. The Prime Minister addressed recent concerns about the involvement of the security services and armed forces in detention activities in his statement to the House of 18 March. That statement laid out measures to be taken to address these concerns.
	International action against torture has been a priority for the Government since the launch of the United Kingdom initiative in 1998. This includes efforts to support wider ratification and implementation of the United Nations convention against torture and the optional protocol to the convention against torture through a combination of bilateral lobbying campaigns, multilateral engagement in the European Union and UN and project work.
	For the period 2008-11, the UK has allocated £5.5 million for overseas criminal justice, prison reform and torture prevention projects. The UK also supports strongly the work of the Association for the Prevention of Torture, the leading non-governmental organisation, which advocated the adoption of the optional protocol to the convention against torture and continues to campaign for its ratification.
	My point is that the Government have taken a proactive approach to the work internationally against torture. If that is the case, how is that consistent with the right hon. Gentleman's accusation that the UK Government have colluded in the use of torture? I say with respect to him that the two do not coincide, and that this is not a consistent statement of the facts.
	I also say to the right hon. Gentleman that ensuring the welfare of detained British nationals is a priority in the Foreign and Commonwealth Office's consular work. Any allegation of abuse is treated very seriously. All consular staff receive training which covers prisoner issues, including what to do when they have concerns over torture or mistreatment. When we have permission from the individual concerned, we can raise concerns with the relevant authorities with a view to ending the mistreatment and, when possible, have the incident investigated and the perpetrators brought to justice. In exceptional circumstances, we now consider raising concerns even without an individual's express consent. Even when an individual does not want us to take up their case specifically, our knowledge of it may enable us to lobby far more effectively for improvements in the way in which detainees are treated in general. In many countries we also raise far more general concerns about the treatment of detainees as part of our wider human rights dialogue.

Ivan Lewis: My friend is not only honourable, but learned, and he knows full well the answer to this question. That is why it is not reasonable or fair, in the context of this debate, to raise any matter relating to a case that is before the courts. He knows full well that any Minister stood at this Dispatch Box could not engage in an answer to that question without jeopardising matters that I understand are still being considered by the Court of Appeal in this country. One must ask why I am being asked to answer a question that hon. Members know I cannot possibly answer from this Dispatch Box at this time. The right hon. Member for Haltemprice and Howden knows better than to fuel conspiracy theories without providing substantive evidence to the House that proves beyond all reasonable doubt that the accusations that he is making about these cases are borne out.

Ivan Lewis: I am not able to do that in this debate. What the Prime Minister committed to do, in terms of this House, was the following. The authentic and genuine concerns raised by the right hon. Gentleman and others have, in a sense, shone a light on an area of public policy—Government action in the name of the United Kingdom—where, in a modern world, it is entirely appropriate that there should be proper scrutiny and accountability. In those circumstances, the Prime Minister has gone a step further than any previous Prime Minister; he has said that there is a need for such guidance to be produced and that it should then be made available, so that the standards of behaviour expected of anybody acting in the name of the British Government, or indeed the British people, in fulfilling incredibly difficult security duties are clearly in the public domain.
	There was a time—who knows whether this is the case now—when it was perfectly feasible that the right hon. Gentleman could have become, at some point in the distant future, the Home Secretary of this country. If he had fulfilled those responsibilities, he would have faced every day some incredibly difficult judgment calls on how to protect the national security of our country—and balance it with individual human rights and civil liberties. Every day of every week, the Home Secretary, the Foreign Secretary and the Prime Minister have to deal with those difficult dilemmas.
	If the right hon. Gentleman accepts in good faith that this country, and anyone acting in the name of this country, has not—as far as we are aware—engaged directly in torture, a secondary question arises. If, as Home Secretary, he received information that came as a consequence of collaboration and co-operation between the United Kingdom and others who may not play by our rules, abide by our standards or respect human rights in the same way as we do, what would he do about accusations against such individuals—I wish to make it clear that I am not referring to any individual mentioned in this debate—who were clearly engaged in terrorist activities that represented a threat to the people of this country? What would he have said if he were sat in the Home Secretary's chair? Would he have said, "It is not appropriate under any circumstances for me to accept that information or evidence and to act on it, because I believe that there is a real danger that the dreadful security services in country X may have engaged in activities that are totally unacceptable under the standards of the UK"?
	I do not know the right hon. Gentleman, but having listened to his appearance on "Desert Island Discs" I regard him as an authentic, genuine and straight Member of this House. I put it to him that had he become Home Secretary, those are the kinds of judgments that he would have had to make on a daily basis. That is why he more than anyone should not repeat accusations with no substantive evidence to support them. We have a series of allegations, some of which have been made by people who have been convicted, and others made by people who, as far as I know, have not been convicted in any court. We have no substantive, clear, unequivocal evidence to support the right hon. Gentleman's contention that the British Government or agents acting on their behalf have colluded with acts of torture.
	The right hon. Gentleman must demonstrate how he can be so sure that the evidence is so overwhelming and so beyond all reasonable doubt that he—as a highly respected and responsible parliamentarian—can come repeatedly to this House and use privilege to repeat those accusations.

David Davis: I do not wish to interrupt the Minister's peroration, but I put the question in three parts, one of which was whether he would undertake to look in the places that I indicated—in the agencies and the in camera proceedings that are all available to him—and confirm things for himself. What he says are unfounded allegations, I believe to be facts.